* Budget battles could draw out the process of confirming Janet Yellen as chairwoman of the Federal Reserve and provide a new venue to debate the effectiveness and duration of the central bank's bond-buying program.

* President Obama warned of "economic chaos" if a political stalemate causes the U.S. to no longer be able to pay its bills, and said he would accept even a short-term increase in the borrowing limit to give lawmakers time to negotiate.

* From Treasury yields to the volatility "fear gauge", market metrics indicate worry as the government deadlock drags.

* JPMorgan is looking to scale back lending to pawn shops, payday lenders, check cashers and certain car dealerships as it seeks to tighten controls in a period of heightened regulatory scrutiny.

* U.S. refiners are selling more fuel abroad than ever before, effectively exporting the American energy boom around the world.

* Sears Holdings has been selling off some of its best stores to raise cash, an unusual strategy that makes it harder for the struggling chain to improve its sales even as it helps shore up its financial position.

* Efforts by creditors of Energy Future Holdings Corp to reach a wide-ranging deal to address the Texas power company's massive debt load suffered a setback earlier this week when separate groups of lenders and bondholders gave a tepid response to a proposal from another large creditor, the giant mutual-fund firm Fidelity Investments, according to people familiar with the matter.

* Jos. A. Bank has approached Men's Wearhouse about a combination of the two companies, a proposed deal that would create a nationwide powerhouse in men's apparel.

* U.S. drug distributor McKesson Corp is in advanced negotiations with the majority shareholder of Celesio AG to buy the German rival for more than 3.74 billion euros ($5.08 billion), according to people familiar with the matter.

FT

The International Monetary Fund revised up UK growth forecast more than any other leading economy and dropped its criticism of the UK government's austerity program.

The U.S. unmanned aircraft industry which was hoping to benefit from the domestic commercial sector is facing a backlash as scores of U.S. states have privacy concerns ahead of 2015, when the commercial airspace opens up for the drone manufacturers.

Alitalia, Italy's national airlines faces a cash crunch with a major creditor threatening to cut off fuel, even as the government attempted to keep the airline afloat.

Hedge fund SAC Capital was given until November by the U.S. prosecutors to resolve criminal charges or risk paying more than 1.8 billion.

The privitisation of Royal Mail is set to become one of the biggest state sell-offs since the British Telecom and British Gas in the 1980s.

A regulatory framework for the British press was postponed till the end of the month after parliament and industry seemed set to fail at arriving at a compromise.

Several of Samsung smartphones are likely to be stop being sold in U.S. after President Obama decided against vetoing the ban, despite using a veto for lifting a similar ban of Apple inc products earlier.

European Parliament declined to impose stringent regulations on the electronic cigarette industry bringing relief to the rapidly growing industry.

NYT

* President Obama will nominate Janet Yellen as chairwoman of the Federal Reserve on Wednesday, White House officials said Tuesday night, ending an unusually prolonged and public search to fill one of the most important economic policy-making jobs in the world.

* In a suburb due east of Los Angeles, Starbucks Corp is opening a $70 million, state-of-the-art plant that will produce cold-pressed juices. The factory is the latest investment that underscores Starbucks' determination to transform its brand from being synonymous with coffee to a food and beverage juggernaut.

* From New York to Silicon Valley, more and more large American corporations are reducing their tax bill by buying a foreign company and effectively renouncing their U.S. citizenship.

* The Government Accountability Office is to release a report on Wednesday that the supply of most U.S. nuclear reactors is drying up and that their ability to provide electricity is at risk. Most nuclear reactors in the United States rely on a type of lithium that is produced only by China and Russia, and the supply may be drying up.

* After months of fighting the government's insider trading case tooth and nail, hedge fund SAC Capital Advisors is leaning toward admitting criminal wrongdoing and agreeing to pay a record financial penalty to resolve the charges, according to two people briefed on the deliberations. (

* Nuance Communications Inc, a maker of voice recognition software, disclosed on Tuesday that it would allow billionaire Carl Icahn to nominate two directors to its board. Icahn has chosen his son Brett and David Schechter, a senior analyst at his firm.

* Twitter Inc's initial public offering appears to be the first one from a big technology company that simply prepared a thorough filing without pushing the boundaries.

* The European Parliament on Tuesday scrapped proposals by health officials that electronic cigarettes be tightly regulated as medical devices, setting the stage for a debate in the United States over the extent of regulation.

* In another blow to Samsung Electronics Co Ltd in its continuing patent disputes with Apple Inc, the Obama administration has decided to uphold a ban requested by Apple of some of Samsung's mobile products. The ban, which was ordered by the International Trade Commission, was issued in August after the agency determined that Samsung had violated two Apple patents.

* The Agriculture Department issued a public health alert this week, saying that a strain of salmonella may have sickened 278 people who reported becoming ill after they ate poultry produced by Foster Farms.

Canada

THE GLOBE AND MAIL

* Ottawa is offering to make it easier for small businesses to take part in its proposed Canada Job Grant by allowing "mom-and-pop" firms to pay less money than larger ones to access the program. Federal Employment Minister Jason Kenney announced this detail of the grant on Tuesday in Toronto's financial district, as he promised more "flexibility" to get reluctant provinces onside with the program.

* Ontario's Liberal government will spend a billion dollars to cancel two gas-fired power plants, a sum that puts the scandal among the costliest in the province's history and threatens to damage the party months before an expected election.

Reports in the business section:

* The federal government will be watching for any national security implications in the event that BlackBerry Ltd is sold, says Treasury Board President Tony Clement. Speaking on the sidelines of the Government Technology Exhibition and Conference, Clement said Ottawa's position for now is to let events play out.

NATIONAL POST

* The Progressive Conservatives made the jump from third to second in Tuesday's Nova Scotia election, four years after losing power. When the legislature returns Jamie Baillie will be the leader of the Official Opposition, an achievement for a party that is still seen to be in a rebuilding phase under his fledgling leadership.

* A high-profile Toronto lawyer has filed an application for judicial review, contesting the appointment of Marc Nadon, a former Federal Court and Federal Court of Appeal judge from Quebec who was sworn in as the newest member of the Supreme Court earlier this week.

FINANCIAL POST

* In a final bid to convince Canada's National Energy Board of the merits of its Line 9 pipeline reversal project, Enbridge Inc played up the economic benefits while insisting criticism of the plan by certain parties has been nothing short of "irresponsible".

China

CHINA DAILY

- China's central government unveiled plans to tighten its supervision over the use of poverty-relief funds on Tuesday, following reports of corrupt mis-allocation by local authorities.

SHANGHAI DAILY

- Torrential rain in Shanghai between Monday night and noon on Tuesday flooded 50 roads and 600 households. The biggest rainfall in 52 years led to the death of two workers who were electrocuted when attempting to pass a flooded area.

- Shanghai home sales hit a six-month high in September, according to research conducted by Shanghai Uwin Real Estate Information Services Co.

PEOPLE'S DAILY

- Some Chinese government officials indulge in excessive numbers of meetings, documents and speeches, said a commentary in the paper that acts as the government's mouthpiece. It is more important to engage in activities that have a practical impact on society.

Fly on the Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

Calamos (CLMS) upgraded to Market Perform from Underperform at Keefe BruyetteCubist (CBST) upgraded to Buy from Neutral at MizuhoEOG Resources (EOG) upgraded to Outperform from Neutral at Credit SuisseMasco (MAS) upgraded to Neutral from Underweight at JPMorganMichael Kors (KORS) upgraded to Overweight from Neutral at Piper JaffrayOwens Corning (OC) upgraded to Overweight from Neutral at JPMorganTD Ameritrade (AMTD) upgraded to Market Perform from Underperform at Keefe BruyetteTeekay (TK) upgraded to Overweight from Equal Weight at Barclays

Downgrades

C&J Energy (CJES) downgraded to Market Perform from Outperform at CowenGreen Dot (GDOT) downgraded to Neutral from Overweight at Piper JaffrayHess Corp. (HES) downgraded to Neutral from Buy at CitigroupK12 (LRN) downgraded to Market Perform from Outperform at BMO CapitalK12 (LRN) downgraded to Neutral from Outperform at RW BairdPacific Sunwear (PSUN) downgraded to Neutral from Overweight at Piper JaffrayPatterson-UTI Energy (PTEN) downgraded to Market Perform from Outperform at CowenRalph Lauren (RL) downgraded to Neutral from Overweight at Piper JaffrayViroPharma (VPHM) downgraded to Neutral from Buy at Mizuho

Initiations

AbbVie (ABBV) initiated with an Outperform at Credit SuisseAllergan (AGN) initiated with an Outperform at Credit SuisseAmphenol (APH) initiated with a Neutral at SunTrustArrow Electronics (ARW) initiated with a Buy at SunTrustAvnet (AVT) initiated with a Buy at SunTrustBristol-Myers (BMY) initiated with an Outperform at Credit SuisseBrunswick (BC) initiated with a Buy at CitigroupChicago Bridge & Iron (CBI) initiated with a Buy at JefferiesCoach (COH) initiated with a Neutral at Piper JaffrayEli Lilly (LLY) initiated with a Neutral at Credit SuisseExOne (XONE) initiated with a Buy at Janney CapitalFluor (FLR) initiated with a Buy at JefferiesForest Labs (FRX) initiated with a Neutral at Credit SuisseFoster Wheeler (FWLT) initiated with a Hold at JefferiesGoodrich Petroleum (GDP) initiated with an In-Line at Imperial CapitalGulfMark Offshore (GLF) initiated with an Outperform at CowenHancock Holding (HBHC) initiated with an Underperform at BofA/MerrillHornbeck Offshore (HOS) initiated with an Outperform at CowenIBERIABANK (IBKC) initiated with a Buy at BofA/MerrillJacobs Engineering (JEC) initiated with a Hold at JefferiesKBR (KBR) initiated with a Buy at JefferiesMatson (MATX) initiated with a Buy at StifelMerck (MRK) initiated with a Neutral at Credit SuisseNavios Maritime (NM) initiated with a Hold at StifelOCI Resources (OCIR) initiated with a Buy at CitigroupPfizer (PFE) initiated with an Outperform at Credit SuissePike Electric (PIKE) initiated with a Hold at JefferiesRuby Tuesday (RT) initiated with a Buy at B. RileySVB Financial (SIVB) initiated with a Buy at BofA/MerrillSensata (ST) initiated with a Buy at SunTrustTE Connectivity (TEL) initiated with a Neutral at SunTrustTexas Capital (TCBI) initiated with a Buy at BofA/MerrillURS Corporation (URS) initiated with a Hold at JefferiesUltrapetrol (ULTR) initiated with a Buy at Stifel

U.S. refiners (MPC, VLO, EPD) are selling more fuel abroad than ever before, effectively exporting the American energy boom to the four corners of the world. While federal law bars overseas shipments of most U.S.-produced oil, refiners can export petroleum products created from that crude, including gasoline, diesel and jet fuel, the Wall Street Journal reports

Wal-Mart Stores (WMT) and Bharti Enterprises are breaking up their Indian JV, leaving the world's biggest retailer to go it alone in a country where it has struggled to build a bigger presence. Wal-Mart will take over its Indian partner's 50%, which runs 20 wholesale stores under the Best Price Modern Wholesale brand, Reuters reports

Nestle (NSRGY) is looking to sell its Jenny Craig diet business and is talking to a small group of potential buyers about the brand, sources say, Reuters reports

Microsoft’s (MSFT) $7.2B pairing with Nokia’s (NOK) handset business is failing to win over the software developers crucial to its success, Bloomberg reports

Delta Air Lines (DAL) and AMR Corp.’s (AMR) American Airlines are waiting on new jets stuck as far afield as Germany with the partial shutdown of the U.S. government stalling deliveries across the global aerospace industry, Bloomberg reports